United States: New Bill In New York Proposed For Signature By Governor Andrew Cuomo Is Set To Make Employers "SWEAT"

Last Updated: August 30 2019
Article by Michelle M. Arbitrio and Matthew R. Ross

The New York State Assembly and Senate recently passed the Securing Wages Earned Against Theft (“SWEAT”) bill to enable alleged employee-victims of wage theft to recoup unpaid wages by placing a temporary lien on the real or personal property of their employer(s). The union-backed bill is currently awaiting Governor Andrew Cuomo’s signature in order to become law. SWEAT amends five sections of New York State law for the purpose of increasing the likelihood that victims of wage theft can secure payment of unpaid wages for work already performed. The justification for the bill is to eliminate exploitative employers from dissipating their assets or dissolving their businesses in a systematic effort to avoid paying wages they owe to their employees during a pending court action. Thus, SWEAT was passed to provide wage theft victims with a legal remedy – a lien to freeze an employer’s assets – lest being unable to enforce and collect on a judgment for unpaid wages.

Some critics argue that the bill’s well-meaning purpose is obscured by its overreaching sweep. While the bill makes it easier for actual victims of wage theft to recover unpaid wages by encumbering an employers’ assets, it permits ostensible victims to file such liens based purely on unproven and unsubstantiated allegations. New York employers should review and understand the potential ramifications of the bill, and be mindful of potential exposure of personal assets during the dissolution of their business.

Substance and Scope of SWEAT

First, the bill creates an ’employee lien’ for employees with an alleged wage claim. Both ’employee’ and ‘wage claim’ are defined broadly and embrace the same language as the terms defined under the New York Labor Law and the Fair Labor Standards Act. However, government agencies are exempt from the definition of ’employer.’

The Employee Lien

Employees will be permitted to file a lien based purely on an allegation of unpaid wages. Once the lien is filed, the employer bears the onus of removing it via bond or seeking court intervention to prevent forfeiture of its property. The wage lien extends to both real and personal property of an employer so long as the property is located in New York State (unlike a mechanics lien that can only be filed to encumber real property). Employees can file the lien on behalf of themselves, but employee wage liens cannot be filed on behalf of a putative class of similarly situated employees. A representative of the employee may also file a lien, along with the New York Department of Labor or the New York Attorney General.

The lien must be filed within three years of the employee’s employment with an applicable employer and must be filed with the county clerk where the property is located. The lien lasts for one year and it is valued at the amount of the wage claim, including liquidated damages. The employee has one year to foreclose on the lien, if there is no pending wage claim action. The lien will automatically extinguish if the employee neglects to foreclose within one year. If there is an underlying wage claim action filed within one year after the lien is filed, then the lien automatically extends until final resolution of the action. The employer may discharge the lien by purchasing a bond at any time or by proving that the employee willfully exaggerated the lien.

Attachment Revisions

Second, SWEAT amends the New York Civil Practice Law and Rules by creating a new ground for attachment. Plaintiffs will now be able to obtain prejudgment attachment of the employer’s assets during the pendency of a court action. To do so, the plaintiff must satisfy a relatively low burden and prove that an employer is hiding or transferring assets. However, if a plaintiff seeks an attachment then the plaintiff must post a bond. The bond cannot exceed $500 for unpaid wage claims and can be waived by the court. If a plaintiff’s attachment motion is denied, the employer may not recover attorneys’ fees and costs. In any event, a court must hold a hearing within 10 days of an employer’s opposition whenever a plaintiff seeks an attachment during a wage claim.

Amendments to Business Corporations and LLCs

The bill also expands the likelihood of personal liability. Specifically, the bill streamlines procedures to hold either the largest shareholders of a non-publically traded corporation or the 10 members with the largest ownership interest personally liable for wage theft. Under current law, such individuals are personally liable for any unpaid wages if the business entity cannot pay. However, SWEAT expands personal liability by putting these individuals on the hook for liquidated damages, penalties, interests, attorneys’ fees and costs included in a judgment for wage/hour and retaliation claims.

Concerns for Employers

At a time when small businesses are facing an increased volume of wage and hour claims, entrepreneurs are concerned that SWEAT will further increase the cost of doing business in New York. Business owners oppose the bill to the extent that it will allow disgruntled employees to exaggerate unpaid wage claims and freeze an employer’s assets based on unsubstantiated allegations of wrongdoing. It could cause employers to bear a heavy cost to remove the lien even if they prevail in the underlying wage dispute. Employers are concerned that the bill will deter investors from supporting New York businesses for fear of risking their assets or a lien based on unsubstantiated allegations that wages were improperly paid.

Risk Management Recommendations

SWEAT must still be signed by Gov. Andrew Coumo before it can become law. Until then, employers can initiate preemptive measures to mitigate the risks associated with the new bill, including conducting periodic audits to confirm that they are compliant wage and hour laws; paying any unpaid wages alleged by an employee if there is a reasonable belief to support the allegations; and reviewing their employment practices liability policies to confirm that the carrier will advance bonds that will enable the employer to discharge any liens.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions